Embattled bookseller Borders US has plunged further into the red, prompting some experts in the US to suggest Chapter 11 bankruptcy may be its only chance of survival.

The company reported a consolidated loss of $16.2m (£10.9m) in the year to January 31 compared with a consolidated loss of just $400,000 (£270,709) the year before.

At its Borders chain like-for-like sales plummeted 10.8 per cent in the year and 15.3 per cent in its fourth quarter. Comparable store sales at its Waldenbooks fascia declined 5.1 per cent in the year and 4.7 per cent in the final quarter.

Total consolidated sales for the 12 month period dropped 8.8 per cent to $3.2bn (£2.16bn).

One analyst believes filing for Chapter 11 bankruptcy “may be the only way forward” so the retailer can shed unprofitable stores. He said: “It’s a big business with a big brand. If it went into Chapter 11 I am sure someone would pull it out. The business
is worth saving.”

Borders has agreed a one-year extension of its $42.5m (£28.8m) senior secured term loan with its largest shareholder Pershing Square Capital Management.

Sales at the company’s international arm, including Paperchase, which has 122 stores in the UK, slumped 21.7 per cent to $43.2m (£29.2m) in the fourth quarter. In the full year, international sales dropped 5.8 per
cent, including the impact of foreign currency fluctuations.

Borders group chief executive Ron Marshall, who was appointed to the role in February, said: “Our top priority is getting our financial house in order by continuing to reduce expenses, pay down debt and improve cash flow.”

Since January Borders has dramatically slimmed down its business, eliminating six vice-president positions and 10 directorial roles across the group. Last year the company also shed 679 store staff and will make a further 742 store management positions redundant this year.

HSBC analyst Paul Smiddy said book sales are “falling off around Europe and in most other markets”, adding that independent book shops make it one of the more fragmented sectors in retail.

Barnes & Noble, the world’s largest bookseller, had a stronger year with store sales down 2.7 per cent to $4.5bn (£3.05bn) in the year to January 31. According to one analyst Borders has been hit by the lack of “a competent chief executive”, while Smiddy noted that conversely, Barnes & Noble has “very stable management”.